In the Arena

Economic Reality

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Here’s a quote to start the day from the New York Times:

“I want to have as few people touching our products as possible,” said Dan Mishek, managing director of Vista Technologies in Vadnais Heights, Minn. “Everything should be as automated as it can be. We just can’t afford to compete with countries like China on labor costs, especially when workers are getting even more expensive.”

Yikes, but true. The candid Mr. Mishek then proceeds to total up the costs of hiring a new employee–time wasted sorting through irrelevant and illiterate resumes, $150 per drug test, a federally mandated safety program ($7000 per year).

I suspect that even if these costs didn’t exist, Mr. Mishek wouldn’t be hiring–so long as there are machines to do the jobs humans used to do. This is a problem. There are a lot of jobs that simply won’t be coming back because…they don’t exist anymore. And so, what to do? Jacob Hacker of Yale University and others have done projections on which industries will be hiring ten years from now and it’s pretty depressing–but one profession that will certainly be hiring is health care. Ten years from now, an awful lot of former construction workers will be male nurses (at about $60,000) per year and home health care will be experiencing a boom (at much lower salaries). Which raises some questions: Who will employ all these people if we remain so intent on cutting future health care spending? And if we want to maintain a middle class, shouldn’t we be trying to find ways to pay these people–and others, like teachers–more?

We may be looking at a choice between two possible societies. One would be low-tax, high unemployment, smaller middle class. The other would be higher-tax, lower unemployment, larger middle class. Neither is very appetizing, especially given the way things were in the recent past. But forced to chose, I’ll take the larger middle class every time. It is the single most important factor in maintaining a democracy. The conservative ideologues insist that equality is purchased at the price of freedom. The reality is the opposite: freedom can’t really exist without a modicum of equality. That formula brought this country its greatest economic success in the 1950s and 1960s. Bosses earned less; workers earned more. It is the most promising path forward now.

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